Causes And Consequences Of Trade Deficit In Pakistan

Abstract

This research focused upon short run as well as long run relationship among the balance of trade, real effective exchange rate, foreign direct investment, market size, average tariff rate, domestic consumption and infrastructure for the data sample 1975 to 2019. Different tests found the data as stationary at first and second differencing. The co-integration results found that the foreign direct investment, market size, average tariff rate and infrastructure impacted positively while the real effective exchange rate and domestic consumption impacted negatively on trade deficit of Pakistan.